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2020 (9) TMI 665 - AT - Income TaxTDS u/s 195 - disallowance of reimbursement of sales promotion expenses - Addition u/s 40(a)(ia) - HELD THAT:- Assessee has entered into an agreement with M/s Pharmark Consulting FZE, UAE and appointed them as their agent for the business in Russia. The agents appointed the employees/staffs for promotion of assessee’s products, for identifying new customers and carry out marketing and sales promotion in Russia. Expenses incurred by the agent in Russia, the assessee has reimbursed to its agent operating from UAE. CIT(A) appreciated the total fact and judicial precedents and came to the conclusion that the agent provided the marketing support service as per marketing and promotion strategies devised by the assessee. The assessee retains full control over all the marketing activities in Russia and the agent was simply implemented the same. The above said agent incurs the expenses on behalf of the assessee and assessee reimburses the same to the agent i.e., M/s Pharmark Consulting FZE in the nature of reimbursement of expenses Payment made to non-resident/foreign company towards services rendered outside India, payee has no business connection in India and the services provided by the agents are not managerial in nature - payment made for the said services are not covered under section 9 (1)(vii) and not chargeable to tax as fees for technical services in India - there is no evidence that the non-resident agent has rendered any managerial service to the assessee and the agreement indicates only services on commission basis. Accordingly, provisions of section 195 are not attracted on payment of reimbursement of expenses made to its agent in UAE. Disallowance under section 40(a)(i) of the Act cannot be made in the case of the assessee. Accordingly, he directed the assessing officer to delete the addition. After considering the complete facts and the judicial precedents, we are in agreement with the findings of the Ld CIT(A) and we do not see any reason to interfere with the decision. Accordingly, the ground raised by the revenue are dismissed.
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